The glittering eight-metre centrepiece of Sturt St's festive decorations was dismantled yesterday after flames engulfed it about 10.45pm on Sunday, sending thick plumes of black smoke into the night sky.

Police have ruled out an electrical fault as the cause and are hunting for a male who was seen acting suspiciously at the base of the tree just moments before it caught fire.

"This is an act of vandalism against the community," Cr Verlin said. "This is a community investment and it's disappointing when one or two stupid individuals spoil the fun for everyone else," Cr Verlin said.

"This impacts the whole community because it is ratepayers' money being used for a community asset, so ratepayers have every right to be disappointed."

Cr Verlin said council would meet police to discuss how to prevent similar acts of vandalism in the future.

"As a community we need to send a very clear message this behaviour is totally unacceptable. I have had discussions with police this morning and we will be continuing to meet with police looking at new initiatives to combat this type of behaviour," she said.

"Council has made significant investment in CCTV cameras in the city area, so if people do the wrong thing they are going to be caught and will be responsible for their actions."

The act of vandalism came just three weeks after The Courier reported council had been forced to hire security guards to prevent similar late-night damage to its decorative reindeer display in front of the Town Hall.

Ballarat police criminal investigations unit Detective Senior Constable Garth Morris described the act as "random, inexplicable, anti-social behaviour" and said the likely source of the blaze was a cigarette lighter or match.

He said the highly flammable plastic material the tree was made of made no accelerant necessary.

Det Sen Const Morris said security guards at a nearby nightclub called police after spotting a male behaving suspiciously at the base of the tree before it caught fire.

Anyone with information is asked to phone Ballarat CIU on 5820 6080 or CrimeStoppers on 1800 333 000.